What Is Collective Bargaining?

By Caitlin Mazur
Oct. 27, 2022

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Collective bargaining is an often controversial but effective method to ensure fair working conditions for employees in a variety of industries.

In this article, we’ll discuss what collective bargaining is, who it affects, and its pros and cons. We’ll also share U.S. laws that may impact your employment terms and information on how collective bargaining and unions fit together.

Key Takeaways

  • Collective bargaining is when employees and their unions negotiate contracts and employment terms with their employers.

  • Grocery store workers, teachers, and postal workers are just a few of the groups eligible for collective bargaining.

  • While collective bargaining can improve work conditions and clarify employee rights, it also comes at a high cost for both employees and employers.

What Is Collective Bargaining?

What Is Collective Bargaining?

First coined in 1891, collective bargaining is defined as the process in which a group of employees negotiates contracts and employment terms with their employers with the help of their unions.

The negotiation can include things like:

  • Conditions of employment

  • Base pay

  • Benefits

  • Hours

  • Overtime

  • Holidays

  • Leave and disability terms

  • Job safety policies

  • And more

The process of collective bargaining takes place between company management and a labor union. In the United States alone, over 10% of U.S. workers are union workers.

The result of an agreement is called a collective bargaining agreement and it is typically established for a set number of years depending on the final agreement.

This process can be time-consuming and sometimes result in antagonistic labor strikes or employee lockouts if an agreement can’t be reached.

Who Is Eligible for Collective Bargaining?

Unions in the United States can be in the private sector and the public sector. Unionization is more popular in the public sector, with 33.6% of workers unionized compared to the 6.2% of private-sector workers. Typically, workers who are unionized fall into the following careers:

  • Grocery store employees. Eligible underneath the United Food and Commercial Workers International Union (UFCW), this labor union represents 1.3 million workers in industries including retails, meatpacking, food processing, hospitality, agriculture, and more.

    The food retail category operates in major chains across the country including Kroger, Safeway, Giant Food, Stop Shop, Acme, among others.

  • Airline employees. Aviation trade unions have three categories including air traffic control trade unions, airline pilot trade unions, and flight attendants trade unions. In each of these categories are a variety of unions to choose from depending on your location or job.

  • Professional athletes. Trade unions for athletes were born from some of the most iconic superstars falling victim to harsh expectations and unbalanced wages.

    Unions exist for The National Hockey League (NHL), Major League Baseball (MLB), the National Football League (NFL), and The National Basketball Association (NBA) in the United States.

  • Teachers. There are a wide variety of teacher unions, many based on location.

    The largest teacher union in the United States is the National Education Association which represents public school teachers as well as other faculty at colleges and universities, retired educators, and college students studying to become teachers.

  • Autoworkers. Eligible under the United Auto Workers, this union group represents workers across the United States and Canada and has about 800 separate unions that negotiate contracts for just over 2,000 employers.

  • Postal workers. Postal workers are eligible to join the American Postal Workers Union (APWU) in the United States. As of 2020, they represented over 200,000 employees and retirees of the United States Postal Service who belong or belonged to the clerk, maintenance, motor vehicle, and support services divisions.

  • Actors. As with teacher unions, there are a variety of unions that actors can choose to join including the Screen Actors Guild. Because the demands of acting can vary, unions can protect actors in this unique profession.

  • Farmers. Farmers and agriculture workers can be eligible under a few unions, but the most popular is the National Farmers Union. Founded in 1902, this organization protects and enhances the economic welfare of farmers, ranchers, and their rural communities.

    As of 2021, the National Farmers Union represented over 200,000 family farms and ranches across the country.

  • Steelworkers. Most steelworkers in the United States are eligible to join the United Steelworkers (USW).

    The union covers a diverse range of industries including metals, paper, chemicals, glass, rubber, heavy-duty conveyor belting, tires, transportation, utilities, pharmaceuticals, and more.

  • Other. There are a wide variety of unions out there including those for electrical workers, engineers, communication workers, writers, office workers, and more. If you have a job, you have a right to unionize.

Union members covered by collective agreements get a wage markup over their nonunionized counterparts. This can be anywhere between a 5-10% markup to their salary. Unions are great in that they can work to equalize the income distribution, especially as it pertains to skilled and unskilled workers.

While collective bargaining is a positive negotiating strategy for many workers, the method has also had its share of controversy, especially with public-sector workers. Since tax revenues fund public-sector employee wages, collective bargaining can sometimes be seen as a process that leads to excessive pay for taxpayers.

The Pros and Cons of Collective Bargaining

As with most anything, there are both upsides and downsides to collective bargaining.

Pros of Collective Bargaining

  • A more powerful voice for all employees.

  • Improved workplace conditions and safety.

  • Clearly defined employee rights and employer responsibilities.

Cons of Collective Bargaining

  • High cost for employees and employers.

  • Lengthy process harms company productivity and requires workers to take time off.

  • Employers may be forced to accept terms that harm the company.

The United States Collective Bargaining Laws

In the United States, about 75% of private-sector workers and 66% of public employees are eligible for collective bargaining. This is possible due to a series of laws that came to be in the late 1800s and early 1900s.

  • In 1877, protests broke out in West Virginia when Baltimore and Ohio Railroad cut their employees’ pay for the third time that year. Since the militia sympathized with the workers, protests were unsuccessfully disassembled, and eventually, federal assistance was brought in.

    Only a day later, similar protests broke out in Maryland and across New York, Pennsylvania, Illinois, and Missouri. These strikes lasted six weeks and became known as the Great Railroad Strike of 1877.

  • As a result of these protests, the Arbitration Act of 1888 was passed, authorizing the creation of arbitration panels that would have the power to investigate labor disputes. Unfortunately, the act was a failure, and only one panel ever convened under it.

  • In 1898, the Erdman Act was passed, providing voluntary arbitration and outlawing discrimination against employees for union activities.

  • In 1913, the Newlands Act was passed and became more effective and stayed active until it was superseded in 1917 when the federal government nationalized railroads.

  • In 1916, the Adamson Act was passed, providing U.S. workers with an eight-hour day, each house paid at the same daily wage received for a ten-hour day.

  • Then, in 1917, the Wilson administration tried to return the railroad system to its owners. During this time, the adjustment boards resulted in the creation of a Railroad Labor Board. This pushed a series of decisions that negatively impacted employees in the ’20s.

  • In 1921, they ordered a 12% reduction on employee wages, and a year later, they outlawed a strike. As a direct result, the railway unions terminated their association with the Railroad Labor Board.

    The Railroad Labor Act was a product of negotiations between the unions for railway workers and the major railroad companies. In 1926, the act was passed and to this day covers many transportation workers including airline employees.

  • Following its passing, in 1925, the National Labor Relations Act worked to clarify the bargaining rights of other private-sector workers and also established collective bargaining as a policy for workers of the United States.

    The clarification made it illegal for any employer to deny union rights to any hired employee. It also made it illegal to require any employee to join a union as a condition of their employment.

    Although this act was made into law, unionizing government employees was a controversial move until the 1950s. In 1962, John F. Kennedy authorized an executive order that allowed all federal employees the right to unionize.

The right to collective bargaining is recognized by many human rights groups and is an important benefit for many workers in these types of industries.

In 24 U.S. states, employees working in a unionized organization might be required to contribute towards the cost of representation for any disciplinary hearings that might arise, but this depends on the details of the agreement.

Collective Bargaining and Unions

When you enter the workforce, you’ll want to understand your rights as an employee. This might vary from company to company, but most organizations offer their employees certain rights outlined in their employee contracts.

This often refers to any health benefits, holidays, working conditions, and more, impacting your time working for the organization.

Sometimes, you may work with a larger group of employees who might want to change the terms of employment. Working in a group to negotiate new terms with your employer is not only efficient but often more impactful.

Typically these kinds of groups are called trade unions, labor unions, or simply, a union. Forming and joining a union can help protect the integrity of the specific trade in which one works and improve safety standards while gaining better pay, benefits, and working conditions.

Trade unions are usually responsible for funding the actual organization, head office, and legal team through recurring fees or dues. The staff of representatives is made up of volunteers who work at the organization, collectively negotiating on behalf of the union for better employment conditions. This is defined as collective bargaining.

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Caitlin Mazur

Caitlin Mazur is a freelance writer at Zippia. Caitlin is passionate about helping Zippia’s readers land the jobs of their dreams by offering content that discusses job-seeking advice based on experience and extensive research. Caitlin holds a degree in English from Saint Joseph’s University in Philadelphia, PA.

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